Centuria Industrial REIT (ASX:CIP) 1H20 results & outlook


by Rachael Jones

Centuria Industrial REIT (ASX:CIP) Fund Manager, Jesse Curtis talks 1H20 results, portfolio metrics and trends.

Rachael Jones: Hello. I'm Rachel Jones for the Finance News Network. Today I'm at one of Centuria Industrial REIT's large warehouse facilities in Sydney. It's currently being used as an overfill site for bushfire donations. Joining me today is Fund Manager Jesse Curtis. Jesse, welcome to FNM.

Jesse Curtis: Thanks for having me, Rachel.

Rachael Jones: Now, Centuria Industrial REIT's portfolio comprises a range of properties such as this one we're standing in here today. What does the fund offer investors?

Jesse Curtis: Centuria is Australia's largest ASX listed, pure play industrial REIT. We own a portfolio of 48 high quality industrial and logistics assets with a total portfolio value of 1.6 billion. These assets are located in key metropolitan markets within close proximity to major infrastructure. The fund's objective is to derive rental income from the portfolio and deliver capital returns to unit holders.

Rachael Jones: Now Jesse, let's talk about your half year 2020 results. What were the highlights?

Jesse Curtis: It was a really exciting half for us. We had a record year of acquisitions for this year for CIP with $300 million of complimentary assets being added to the portfolio, and leasing momentum drove a strong first half FY20 result. From an operational perspective, we leased over 63,000 square meters, maintaining occupancy at 95.8%. Pleasingly, the portfolio was well-placed for the remainder of the financial year with only 1.1% of the portfolio expiring before the end of FY20. In the acquisition space, we completed over $300 million of acquisitions, which substantially increased the portfolio to 1.6 billion. These acquisitions were highly complementary to the portfolio and are on strategy to acquire assets which are located in infill markets with close proximity to major infrastructure. Most importantly, we delivered a strong financial result with a return on equity of 13.4% and a total shareholder return of 29% outperforming the ASX A-REIT 300 index.

Rachel Jones: That's excellent news. Now let's talk about the fund. Can you provide an update on the key metrics?

Jesse Curtis: As a result of our leasing success and portfolio acquisitions, the WALE of the fund increased from 4.3 years to 7.1 years with occupancy at nearly 96%. The portfolio size has grown to 1.6 billion whilst gearing has reduced to 35.5%.

Rachael Jones: Jesse, what is the outlook for industrial property and what underpins valuations?

Jesse Curtis: Sure. The Australian industrial market continues to see strong interest from both domestic and international capital. The market is being driven by population growth, trends in online retailing, and a scarcity of investment grade stock available in the market. This is predominantly being experienced by the east coast States of Australia. CIP is well positioned to benefit from these trends with over 85% of the portfolio weighted to eastern seaboard States.

Rachael Jones: To the last question now Jesse, what is the guidance for financial year 2020?

Jesse Curtis: CIP commences the second half of FY20 in a strong position. Today we're reaffirming our guidance of 19.6 to 19.9 cents per unit and to deliver distributions of 18.7 cents per unit.

Rachael Jones: That's excellent. Jesse Curtis, thanks for the updates.

Jesse Curtis: Thanks for having me, Rachael.